Well, I finished my first phone lesson, albeit with a few hiccups and misfires. It worked pretty well, but it would not be my preferred way of teaching if I could avoid it, for a number of reasons.
1 Technical problems are still an issue with Skype. The sound quality is variable, which is ok if you want to talk to another fluent speaker of your language but makes thing much more difficult for learners.
2 Timing: as there are slight delays in transmission the delicate oral ballet that makes up a conversation is often disrupted. Once again fluent speakers can compensate but it can be difficult for less advanced students to know when to speak.
The "No gap - No overlap" rule that English uses doesn't hold true for other languages and so knowing when exactly (and since we're talking about 0.10 second time intervals, I mean exactly) to contribute is a skill that has to be practised.
3 My student was a little hesitant at the beginning of the lesson but so got into his stride and coped with the technology well. However, not everyone is as confident as he is and I think that this kind of communication would be too daunting for many.
4 Video would help these initial difficulties enprmously as being ale to see the other person furnishes us witha wealth of extra information and makes it easier to talk freely, at least with people we know.